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analysis:economics:value:utility_and_utilitarianism

Utility and Utilitarianism

There is an interesting overlap between philosophy and economics. The economic concept of Utility borrows a great deal from Jeremy Bentham’s notions of Utilitarianism. We recall that a simplified description of Bentham’s Utilitarianism said that the greatest good could be achieved by bringing the most happiness to the largest number. Compare that with the economic idea of utility, where (in a similarly simplified version), an individual will attempt to get as much pleasure or satisfaction as they can from consuming goods and services. In the context of theory of value, we could say the individual attempts to get as much value as he or she can from the marketplace.

The theories are more than similar, in fact both describe happiness as measurable in units (invented by Benthem) called Utils. According to Utilitarianism people should strive for everyone to get as many Utils as possible, while standard economics holds that rational consuming individuals will strive to get themselves as many Utils as possible.

Benthem’s theory was attacked for being unwieldy – one critic said he refused to total up the utils before ordering breakfast. Similarly both theories have been accused of being reductionist, of describing complex pleasures and satisfactions as nothing more than a pile of identical blocks.

About eighty years after Benthem first published his ideas, his former acolyte John Stuart Mill adapted Utilitarianism by saying not all Utils are the same, and that some pleasures were more sophisticated than others.

It seems to us that standard economic theory hides this problem by refusing to distinguish between Utils at all, only saying that consumers make their choices for their own reasons.

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analysis/economics/value/utility_and_utilitarianism.txt · Last modified: 2009/02/07 21:23 by drh